The earnings parade continues even as the market tries to come to terms with the Apple surprise and waits for the expected weekend deal out of Europe. We also have economic data this morning about September CPI and Housing Starts, but they will likely have less traction in today’s market given the focus on earnings and Europe.

The September CPI number was largely inline expectations, both on the ‘headline’ as well as ‘core’ basis. Given the recent pullback in commodity prices and the continued slack in the broader economy, inflation will likely have less staying power than would otherwise be the case. However, persistent ‘hot’ CPI readings will make it difficult for Bernanke to rally all FOMC members behind him as we have seen in recent meetings. The Fed dissenters have been questioning the utility of new easing measures in helping the recovery, but the fear of inflation has been a big reason for their opposing views.

In the major earnings reports this morning, Morgan Stanley (MS) beat expectations with the help of the same debit valuation adjustment (DVA) that has become a recurring theme in bank earnings reports this quarter. United Technologies (UTX) also came ahead of earnings and revenue expectations and raised guidance. CSX Corp (CSX), the railroad operator, was able to barely meet expectations, as price increases and fewer shares outstanding due to stock buybacks helped offset tepid volume growth due to soft demand.

The moderately positive earnings report from Abbot Labs (ABT) was overshadowed by the decision to split the company into two stand-alone entities, one focused on medical products and the other on pharmaceuticals. These corporate splits have become all the rage in recent days, with a steady stream of announcements from all across corporate America. The list is quite long, but some of the more notable companies that have gone this way in the recent past include Conoco (COP), Marathon (MRO), Sara Lee (SLE), and McGraw-Hill (MHP).

We had positive earnings and revenue surprise from Intel (INTC) after the close on Tuesday, while Apple (AAPL) did the unthinkable, coming up short. The rare miss likely reflected delayed iPhone sales ahead of the launch of a new model, but will be a hit to investor confidence who had started believing the company incapable of doing anything wrong. We have American Express (AXP) and eBay (EBAY) reporting after the close today.

The earnings season is proceeding as expected, with no major negative surprises (Apple notwithstanding). Continuation of this trend over the coming days will help build market confidence in current estimates for the coming quarters, which will be a big positive for stocks. Now if only Europe comes through on its promises, then we may have the making of a solid rally into the closing days of this year.